Cable's Walls Are Coming Down

HBO GO, the company's video-on-demand service, will let you watch its programming on all kinds of devices, but only if you are a subscriber. At least in the U.S. anyway -- the network is experimenting with non-subscription streaming in smaller European markets.

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Cable's Walls Are Coming Down

HBO GO, the company's video-on-demand service, will let you watch its programming on all kinds of devices, but only if you are a subscriber. At least in the U.S. anyway -- the network is experimenting with non-subscription streaming in smaller European markets.

Yet the cable operators continue to thrive largely because they operate as natural monopolies – the upfront capital costs of laying new cable keep potential competitors at bay. The satellite services don't fare much better in terms of consumer love, and they too enjoy similar barriers to entry (satellites!).

But get ready for a sea change. Even if you're tied to a subscription television service today, there's a great chance you'll become a cord-cutter in short order.

Every wall crumbles given enough time. And that’s what’s happening right now.

Everything we know about cable and satellite service is rapidly mutating. Both content delivery platforms are finally facing competition, and it's coming from a hundred different directions. YouTube is muscling in on traditional cable channels with live broadcasting and by producing its own content. Hulu, Netflix and Amazon are all experimenting with original programming, too.

On-demand content from the mainstream outlets is also everywhere – Apple, Netflix, Hulu, Amazon, Microsoft and Sony are all happy to take your money to deliver programming that once was exclusively distributed by cable and satellite providers. Roku just got a bundle of investment cash from NewsCorp after selling some 3 million set-top boxes this year. Apple sold 1.3 million Apple TVs just last quarter, and over 4 million so far this fiscal year.

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It's clear there are a lot of things providers could do to win over customers. (À la carte pricing would be a big one.) And yet, the industry is still resisting change. Possibly with good reason. Profits at TimeWarner, Comcast and other large providers are trending up, while Netflix's investors are punishing it, brutally so, for growing too slowly.

Despite its current financial health, subscription TV knows cord-cutting is inevitable, and the industry is trying desperately to protect its assets. The cable and satellite services have three final stongholds that are keeping most people tethered: live sports, live news and first-run premium content.

NBC let you watch all its Olympics coverage online this year, live, but you had to log in via a provider that carries MSBC and CNBC, such as Comcast or DirecTV, to do so.

Want to watch Game of Thrones, or any other HBO show? Sure, you can watch it on your Xbox or iPad thanks to HBO GO. But that requires an old-fashioned HBO subscription, which means you have to pony up for basic cable or satellite service before you can stream. I should mention that HBO announced plans just last week to start streaming its shows to people without requiring an existing cable TV subscription – but only in Finland, Denmark, Sweden and Norway, not in the States.

And, seriously, where are you going to turn for live 24-hour news, outside the mainstream sporting events, and first-run shows? If you really, really want that content, you still need a Comcast or DirecTV today. You can't torrent something as it happens!

But the thing is, every wall crumbles given enough time. And that's what's happening right now. Great change often begins very slowly, and then floodgates open all at once. And after years of slow progress in cord cutting, we're approaching a critical mass when that "all at once" is about to hit.

Sure, NBC refused to give the Olympics away without making sure you paid elsewhere for one of its channels. But Major League Baseball has one of the most amazing video-on-demand services around (aside from those pesky local blackouts). The games are available on almost any video-delivery device you can think of, and the MLB doesn't care a whit about your cable company. And it's hardly the only sport doing this – you can also watch college football, cycling and horse racing online.

Meanwhile, instructions for setting up location-spoofing VPNs to watch foreign streams of sporting events are everywhere online. Countless masses watched the 2012 Olympics using some surreptitious method. The combination of piracy and proven paths to profitability that other sporting events have blazed ensure that the 2016 games will be truly on-demand – even though NBC took home a nice paycheck from its London coverage, the network brass must know they left money on the table.

When CNN launched, 24-hour news was widely considered to be a completely crazy idea. But now it's stunning that the network credited with ushering in the always-on news cycle has suffered such a complete failure of vision that it fails to simulcast online every minute of every day. But while CNN (and Fox News, for that matter) have only been tepidly broadcasting live online, international networks have gone full force. Al Jazeera, SkyNews, and a host of others are just waiting to take a bite out of Wolf and Shep.

Moreover, when news breaks we increasingly turn to social media sources to fill us in: Twitter, Facebook, YouTube. Suddenly, we are the news – at least the kind of breaking news that made CNN popular in the first place. Want to watch two gasbags argue politics? Or some multi-hundred-thousand-dollar hologram? The 24-hour cable news channels have your back. But if you'd prefer to see real-time, on-the-ground reportage, nothing compares to social media. And if you need curation, fact checking, and verification, that's just a mere Storify away.

As those two last walls (live sports and news) crumble, they'll topple the third. For now, it's not economically feasible for most networks, especially HBO, to show original programming online at the same time they show it on-air. (We don't yet have details about what sort of delay HBO will apply to its shows in its Nordic experiment, if any.) However, as more people leave subscription services behind for other delivery schemes, we'll see the invisible forces of demand nudge the pay-TV channels to put premium entertainment content online as well.

Cutting the cord is still an outlier activity. You have to do too much searching, use too many specialized devices, and configure too many settings to get what you want. But as devices from Google, Apple, Roku and others make internet delivery indistinguishable from cable and satellite delivery, we're going to wake up one morning and find cord-cutting has gone completely mainstream. And those devices are pretty much already here.

All the advantages enjoyed by subscription TV today are melting away. In five years, those advantages will have been eliminated entirely. In a decade, many of today's constraints will seem laughable. The idea that you had to pay for 400 other channels just because you wanted to watch a single show will be akin to paying for internet access by the hour.

Xfinity, Time Warner and their cohorts aren't going anywhere anytime soon. But while the cable company of tomorrow may provide the pipes, it's certain that it won't provide the plan. In short, subscription TV is already dead. The body just hasn't quit twitching yet.